Cedar Fair revenue up, attendance down in second quarter

Posted Monday, August 1, 2005 6:49 PM | Contributed by Jeff

Net revenues for the quarter ended June 26, 2005, increased 3% to $148.9 million from $145.0 million in 2004, on a 3% increase in average in-park guest per capita spending and a decrease of 2%, or approximately 62,000 visits, in combined attendance. Over this same period, out-of-park revenues, including resort hotels, increased 8%, or $2.1 million.

Read the press release from Cedar Fair.

Tuesday, August 2, 2005 9:33 AM
True, the revenue is up--but so are expenses. So net income is actually down a couple million.

The GL news isn't tragic, but far less than great. An attendance increase of 7% in July (read the long GL quote carefully) does not equal a 7% increase for the season. Frankly, even a 7% seasonal increase wouldn't bring the park back into the million annual visitor range.

But this doesn't mean CF management is somehow failing. It's the economy...especially around Detroit. Okay--Ohio's has been stinking for a while, but Detroit's change precipitates CP's attendance drop. The domestic auto industry is in a deep funk and the real estate market is one of the ten most likely to face a downturn. But bear in mind the chain's less profitable, not losing money.

-'Playa

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Tuesday, August 2, 2005 10:41 AM
I’m not sure the economy excuse is all that much different than the “weather” excuse. The economy is growing in all 50 states. Per capita income is growing in all 50 states. It is true that Michigan and Ohio are not growing as fast as some of the other states, but there is certainly no statistics showing an actual decline in per capita incomes (ie---people have more expendable cash this year than last). I could see how a population base decrease could cause problems. But the fact remains that in the areas surrounding Cedar Point (and other CF parks) the economy, and more importantly per capita income, is larger than it was one year ago!

For whatever reason, they are not at last year’s attendance levels. I’ve seen nothing that would indicate that the economy is the issue. It does not look like they were that far off with the projections. A good August might get them back near original expectations.

Anyhow, you are correct in pointing out that they are making money---just not as much as last year at this point in time!

P.S. Demographic movement has got to be a long term concern for CF as their parks are concentrated in states that are slowly losing electoral votes. I assume this is at least a small reason that you've seen the push for national exposure...

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Tuesday, August 2, 2005 11:09 AM
And why have they not been able to recapture the attendance shortfall from the wet winter at Knott's? I would have thought that with Silver Bullet, along with overflow crowds from the Disney 50th celebration, that attendance would be up over last year. Maybe not by 100,000 total visits, but at least some.............Anyone have more info on per park basis? Dorney should be up too, right?
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Tuesday, August 2, 2005 11:14 AM
Wall Street seems annoyed and over-reacting with a drop of two bucks this morning. My personal feeling is that this is still a transitional year for Geauga Lake, and it will be next year too. They still succeed where the other pure player fails though, in that they remain profitable regardless of weather and economy.

Buy now, while the price is lower.

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Tuesday, August 2, 2005 11:38 AM
I don't want to hear any complaints when capital money continues to go to out of park projects. As has been evidenced the past couple of years, that is where the significant growth will continue to be coming from.
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Tuesday, August 2, 2005 11:56 AM
J Smith - There's three kinds of lies, you know? And that particular statistic is but one among many.

Here's another: Take the nationwide consumer confidence drop and imagine how that plays out in a city like Detroit--where maybe you haven't lost your job for an auto company or one of their many suppliers, but you're not so sure you won't.

See how that makes a difference?

-'Playa

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Tuesday, August 2, 2005 12:45 PM
For what it's worth 'Playa, I agree with you. I've heard others suggest that CP's attendance is down because the Detroit market is not visiting like they have in the past.
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Tuesday, August 2, 2005 2:05 PM
Okay, here's more from the conference call. As of the end of the quarter:

DP up 10% - kinda par for the course with a new major ride

MiA up 15% - Wet stuff power! But remember, their attendance is smaller

CP down 4% - they're promoting / discounting heavily in Detroit

GL down 5% - yes, down 5% YTD from last year's numbers

VF down 4% - Hard to follow Foam Ball Factory, I guess! :)

WOF down 11% - but waterpark attendance is up

KBF down 6% - roughly 110,000 guests

Jack Falfas and the head of the Tri-County Building trades sat down for lunch last Monday and ironed out their differences. CF management estimates they may have lost as many as 30-40,000 guests in Ohio and Michigan over their disagreement.

DP season pass sales were up, CP's were down, others were essentially flat.

-'Playa

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Tuesday, August 2, 2005 2:25 PM
No surprise with Dorney or MiA considering the improvements.

CP attendance still troubles me. I've been saying for several years that per cap spending going up is all fine and dandy but they have to curb the attendance erosion.

GL down 5% tells but up in July tells me that what I thought would happen did happen. People waited until the waterpark opened before making their trip.

30K-40K drop in guests because of the union dispute seems high to me. I hope that is accurate but I suspect it is an inflated excuse. Admitedly, Geauga Lake really relies on corporate outings.

VF's numbers don't shock but Worlds of Fun? Wow. Big drop there. I am a little surprised that KBF hasn't seen some residuals from the Disney anniversary but I've been reading that California Adventure is having its worst year yet.

I wonder if the company is starting to feel the effects in Season Pass sales of waiting too long to hype the next big attraction? I'm not sure the average guest gets all caught up in the internet speculation and perhaps they would be more likely to buy a season pass at the end of the season if they saw big promotions of what was happening next year instead of reading about it in the cold of winter.*** This post was edited by wahoo skipper 8/2/2005 2:26:34 PM ***

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Tuesday, August 2, 2005 2:41 PM
Bear in mind WoF is a two-gate park. They have to choose between the rides and the wet stuff, so off to the wet stuff they go.

A 4% drop at VF this year from a 7% the year before basically equals roughly a 10% total drop from SV's installation. If anything, I suppose that either indicates SV's sustained drawing power or the additional appeal of Foam Ball Factory and the Rockin' Tug. I couldn't tell you which.

-'Playa

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Tuesday, August 2, 2005 3:29 PM
Playa---did you read the link or just the title (I write this with discussion in mind and not confrontation)?

Consumer confidence dropped unexpectedly in July, breaking a three-month winning streak

I see nothing that indicates a poor "economy" from the link! I can’t believe a one-month statistical anomaly would serve as explanation for CF's missed targets. At the very least, this type of conclusion would be quite a reach…

In fact, your link seems to back my take when they say...

"The overall state of the economy remains healthy and consumers' outlook suggests no storm clouds on the short-term horizon," Franco said in a statement. "Even the steady upward tick of fuel prices at the pump has done relatively little to dampen consumers' spirits.

I find more in your link to support my opinion than anything...Maybe we just see it differently!

I've no interest in confrontation if all we have is a differing of opinion. If you have actual data that shows Ohio and Michigan are in a recession, then I can see your point. As it stands now, I've seen nothing that would indicate this to be true. If I get the time, I'll try to find a link for some stuff I was reading last week in which the "so-called-experts" showed data to suggest economic growth in all 50 states!

I just think blaming CF's missed targets on the economy is most likely off base! You may be correct, but I believe there are probably better explanations given the data I've seen, or not seen(including your link)!

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Tuesday, August 2, 2005 3:44 PM
Playa:

Maybe I'm reading your take wrong. I can see how "fear of losing" your job may have an impact on spending. I've been looking more at actual data of jobs lost/per capita income/etc as my baseline. There is no real way to determine how an emotional component like "fear" may play into this...but I grant that it most certainly does!

Anyhow, in terms of CF park placement, this side of Knott's, it would appear that their parks are concentrated in areas that rely heavily on manufacturing/union work. If your opinion is indeed correct, then...?

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Tuesday, August 2, 2005 4:08 PM
Any 'statistics' regardless of best efforts are naught but a guess at best.

Ever lived in Detroit when one of the auto companies were going through a shakeup? Even one of them--like Chrysler during the Daimler 'merger'--much less a time when two of the three are in the crapper?

That would give you some real-life data far beyond some statistic.

-'Playa

*** This post was edited by CoastaPlaya 8/2/2005 4:41:22 PM ***

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Tuesday, August 2, 2005 4:22 PM
...and it trickles down. Where are many of the suppliers for the auto industry located? Try NE Ohio.

Playa...good point about the two gates and I didn't take into account the brutal month they have had with heat at W.O.F.

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Tuesday, August 2, 2005 4:39 PM
Of course, the first place the auto companies start squeezing before idling plants are the third-party suppliers. So long before you read about auto worker layoffs, they've already been happening. Just elsewhere.

And just because you don't lose your job doesn't mean you lose that 4 hours a day of overtime you're used to spending OR lose a bigger chunk of your paycheck to health care even before deductibles or both.

-'Playa

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Tuesday, August 2, 2005 4:51 PM
Maybe it's time to realize that in So Cal only coasters won't cut it. They need to put in a new dark ride to replace some of the family rides that have been lost if they want to continue to reap the overflow Disney tourists.

I can tell you that Knott's best year (attendance wise) was Disney's 30th, and getting people who came for the LA Olympics in 1984. They've never had that attendance peak since, even though one might argue they are more profitable now with additions such as Soak City, the hotel, and TGI Fridays.

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Tuesday, August 2, 2005 5:40 PM
CF parks need to start bringing entertainment in to the parks. How many times can you watch that lame lazer light show. They should start booking some big name bands to put on concerts at the parks like Hershey &SF does. I bet that will boost attendence I know it works at SF because I go to a lot of shows there and the parks are very crowded.
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Tuesday, August 2, 2005 6:36 PM
Keep in mind we are talking about a 2% decrease here (62,000 combined visits). It is not as if the bottom has fallen out. A better than expected August COULD close the gap.
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Tuesday, August 2, 2005 6:42 PM
How are a few dozen concerts going to make any difference unless you have a venue that can hold tens of thousands of people?

I think it's time for Cedar Point to start thinking differently. Ditch the ad agency too. They've built this expectation over the last 20 years that they're always going to build the biggest and best, and you just can't expect to do that forever. PKI knew this and that's why their attendance is on the rise year after year. maXair was a step in the right direction.

Geauga Lake is totally about the water park, and if you visit the park this year you'll see that's true. When phase II is done next year there's no doubt in my mind that they'll see continued growth, and hopefully they'll get done on time. The late start this year certainly didn't help.

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